From the Texas State Library and Archives Commission: General provisions regarding the Texas state flag, and information on the display of the flag, the flag pledge, and the retirement of the state flag are included in Chapter 3100 of the Texas Government Code, available from the Texas Constitution and Statutes site.

See Sec. 3100.059.  HORIZONTAL AND VERTICAL DISPLAY. 

(a)  If the state flag is displayed horizontally, the white stripe should be above the red stripe and, from the perspective of an observer, to the right of the blue stripe.

(b)  If the state flag is displayed vertically:

(1)  the blue stripe should be above the white and red stripes; and

(2)  the white stripe should be, from the perspective of an observer, to the left of the red stripe. (my italics)

This perfect photograph of the Lone Star flag was taken by Matt Pippen at the Texas Capitol in Austin.